On the drug trail
Corporate
On the drug trail
Ravi Ananthnarayan
655 words
27 August 2004
The Economic Times
English
(c) 2004 The Times of India Group. All rights reserved.
For long, global pharmaceutical majors have derided Indian pharmaceutical
companies as copycat companies, who reverse engineer blockbuster drugs and live
off innovator companies' R&D efforts.
While such accusations still fly, Big Pharma has accepted that making India an
ally in their struggle to stay globally competitive is a more pressing need.
Now, that is a big statement about the quality of Indian manufacturing in this
field.
Standing testimony to India's manufacturing prowess are an estimated 70
pharmaceutical plants in the country that are FDA approved, which is believed to
be the largest collection outside America.
Indian pharmaceutical manufacturing has proved its mettle in what is probably
one of the world's toughest regulated markets.
Companies like Dr Reddy's Laboratories and Ranbaxy Laboratories have
successfully made and marketed drugs in America and by all accounts, those
consumers seem satisfied.
Now that Made in India is no longer an issue with Americans, the value for money
that they are getting, backed by FDA's approval for these drugs are enough
reasons for them to consume these drugs.
That marks a critical turning point for Indian companies and indeed for foreign
innovators too.
They have now started to look more vigorously at India as a manufacturing base
for their products, the obvious reason being lower costs and the not-so-obvious
one being that their consumers will not feel nervous about consuming drugs
produced here.
Less than a decade ago, when Indian pharmaceutical markets thought exports,
typical countries that came to their mind were CIS including Russia, Brazil and
some African countries, apart from SAARC.
These are less regulated markets where entry is easy, but now when you look at
the flow of exports, the accent on regulated markets is marked. Even if generic
exports to America have suffered some setbacks of late, Western Europe is being
developed as a viable alternative.
Since April 1, 2003, about 20% of all drug master filings with the US FDA are
from Indian companies.
And we are not talking about just Dr Reddy's or Ranbaxy but a host of other
companies who feel confident of their facilities meeting US FDA standards. DMFs
are not approvals but disclosures to the FDA about facilities, processes etc in
making a drug that can be used to support an ANDA or an export application.
Dr Reddy's Laboratories is a key player in the bulk drugs market or APIs (short
form for active pharmaceutical ingredients).
It has six API plants in AP, all of which are USFDA approved. In '04, it filed
16 DMFs with the USFDA taking its total to 56 and plans to file for 20 more in
'05.
These are key to its performance, as DRL sold Rs 123 crore worth of Ramipril API
in Europe. Cadila Healthcare's API exports doubled to Rs 140 crore in '04 on the
back of alliances with European manufacturers. Cadila filed 12 DMFs during '04.
Nicholas Piramal India too is also eyeing this market. The company signed a
custom manufacturing contract with Advanced Medical Optics, Inc, USA for making
eye care products for global markets including US, Japan and Europe.
It acquired an API facility for Rs 116 crore to enhance its capacity to meet
this and future plans, and also set up a subsidiary in US to develop business
for this activity. At present, the API business sells mainly to European
regulated markets apart from unregulated markets. It has filed for five DMFs in
'04.
Shasun Chemicals and Drugs which started out supplying APIs has shifted to value
added products like intermediates, value-added APIs and formulations, including
contract research and manufacturing services.
Nearly three-fourth of its exports is to regulated markets. The company lays
claim to being the largest producer of ibuprofen in the world with a share of
25% and supplies nearly 15% of US' requirement of the drug.
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